Economic Sector

Last updated: Monday, November 19, 2018

Seeking Foreign Funds to Balance Energy Demand

Posted: Saturday, March 10, 2018

As one of the countries worst effected by climate change in the world, Vietnam is facing significant energy challenges to maintain the path of socioeconomic development. We must ensure power supply to the whole country, even to remote and isolated areas where 2 per cent of rural households still do not have access to electricity. In the coming time, to increase 1 per cent of GDP, the energy sector needs to grow 1.7 - 2 per cent per year. With such high energy demand, Vietnam needs to invest around US$5 - 7 billion annually in the energy sector to keep the right pace.

According to Mr Tran Tuan Anh, Minister of Industry and Trade, the Target Programme on Power Supply for Rural, Mountainous and Island Areas in the 2016 - 2020 period needs as much as EUR1.2 billion of investment capital but the current budget for the 2016 - 2020 period meets just 8 per cent of the total, while the rest is made up by official development assistance (ODA) fund and foreign loans.

Recently, the European Commission and the Ministry of Industry and Trade of Vietnam launched the EU - Vietnam Energy Facility. This is a technical assistance component for implementation of the EUR108-million Energy Policy Support Programme funded by the European Union (EU). The programme aims to increase access to sustainable energy in rural areas of Vietnam and help build a more sustainable energy sector by promoting energy efficiency, clean energy and renewable energy for all people.

Accordingly, 23 subprojects on electricity supply to rural and mountainous areas from national electricity grids will be invested in 23 provinces; two subprojects on electricity supply to rural areas from renewable energy sources will be deployed Cao Bang province and Bach Long Vi Island. Furthermore; and two underground submarine cable subprojects will supply electricity to Tran Island in Quang Ninh province and Nhon Chau Island in Binh Dinh province. It is expected that at the end of the programme about 750 villages will be supplied with electricity, with about 60,000 households having electricity. Another goal of the programme is to supply electricity for one island district and two island communes. This programme also provides technical assistance for Vietnam to enhance its capabilities of administering and building legal frameworks and policies on energy industry.

Mr Stefan Manservisi, Director General of International Cooperation and Development under the European Commission, said “Our ambitious programme of EUR108 million will not only support the Government of Vietnam to achieve its objective of the 2013 - 2020 programme on electricity supply to rural, mountainous and island areas to provide reliable and sustainable electricity access to up to 1.2 million households in rural areas but it will also enhance the governance of the energy sector to facilitate the shift to a more sustainable energy development path in Vietnam.”

The EU indicative grant allocation of EUR346 million supporting the energy sector in Vietnam for the 2014 - 2020 period is the largest grant contribution provided by the EU so far to a single country in support of sustainable energy. This reconfirms the EU’s leading role in supporting the fight against climate change and promoting renewable energy. In Vietnam, the EU is committed to contributing more to a more sustainable energy sector by promoting energy efficiency, clean energy and renewable energy.